Friday, 8 June 2012

The destructive power of the failed euro project hits Spain

The destructive power of the failed euro project is hitting Spain with full force. The once so proud kingdom is according to news reports going to beg for rescue money from Brussels tomorrow. But the question remains, whether there will be enough money to bail out the Spanish banks:

While the International Monetary Fund thinks Spanish banks require €40bn or so in fresh capital, any loan package may have to be much larger to restore shattered confidence in the country.

Megan Greene from Roubini Global Economics says Spain's banks will need up to €250bn, a claim that no longer looks extreme. New troubles are emerging daily. The Bank of Spain said on Thursday that Catalunya Caixa and Novagalicia will need a total of €9bn in new state funds.

JP Morgan is expecting the final package for Spain to rise above €350bn, while RBS says the rescue will "morph" into a full-blown rescue of €370bn to €450bn over time -- by far the largest in world history.

"Where is the money going to come from?" said Simon Derrick from BNY Mellon. "Half-measures are not going to work at this stage and it is not clear that the funding is available."

What makes the case of Spain so sad, is that Spain´s poor people will be the ones who are going to suffer most of the euro madness - and there are many of them. Few people outside of Spain know that among the EU countries only Romania and Latvia have a higher poverty rate than Spain:

The study commissioned by the Spanish Roman Catholic Church charity organisation, draws attention to the danger facing 11 million people who could fall below the poverty threshold, while confirming that there are around 30.000 homeless people across the country.

Among the findings in the report ‘Exclusion and Social Development 2012’ was pusblished this week by Caritas Spain it states that already 22% of Spanish households are living under the poverty line with a further 30% facing serious difficulties in making ends meet at the end of the month and 580.000 Spaniards, nearly 3.3% of the population, receiving no income whatsoever.

“There are more poor people than last year, and they are poorer. After four years of financial hardship poverty is more widespread, more intense and it is creating a polarised society in which the difference between rich and poor is growing,” said Caritas Secretary Mora.

Spain is among the European countries with the highest poverty rates, totalling up to 21.8% of the population -- over the EU average of 16.4%. Only Romania and Latvia rank before Spain in the list.